Shares of Sony Group Corporation climbed over 10% during Friday’s trading session after the Japanese multinational conglomerate raised its sales outlook for full year 2024.
The company reported a 69% increase in net income and 3% uptick in revenue during its second quarter of 2024, with weaker results at Sony Pictures Entertainment offset by growth in its Games and Networks business.
Sony anticipates 12.71 trillion yen ($83.23 billion) in sales for the year, up from its previous guidance of 12.6 trillion yen ($82.5 billion), while its forecasts for operating income and net income remain unchanged at 1.31 trillion yen ($8.58 billion) and 980 billion yen ($6.4 billion), respectively.
Here are the top-line results:
Net income: 338.5 billion yen ($2.2 billion), up 69% year over year
Revenue: 2.91 trillion yen ($19 billion), up 3% year over year
Operating income: 455.1 billion yen ($2.98 billion), up 73% year over year
Sony Pictures Entertainment: Sales of 355.8 billion yen ($2.33 billion), down 11% from 2023
Strike-affected TV deliveries impact Sony Pictures
A falloff in the number of deliveries of television programs, in part due to the impact of the 2023 Hollywood strikes, drove down sales in Sony Pictures Entertainment. Operating income fell 37% to 18.5 billion yen ($121.1 billion), mainly due to the decline in sales.
During the quarter, Sony released five films theatrically, including “It Ends With Us,” “Bad Boys: Ride or Die,” and “Venom: The Last Dance.” Crunchyroll, which has previously surpassed 15 million monthly paid subscribers, also expanded its user base through partnerships with Prime Video channels and YouTube Primetime channels, the latter of which will launch at the end of the year.
Sony said that while it was still recovering from the strikes, the number of major films it has released since the work stoppages has been increasing. “We expect television and video streaming service licensing revenues to recover from the second half of this fiscal year through next fiscal year,” the company added. “Moreover, we have begun streaming many new anime titles from the second half of this fiscal year and aim to further increase engagement with anime fans around the world.”
For fiscal year 2024, Sony Pictures Entertainment sales are expected to fall slightly to 1.51 trillion yen ($9.9 billion), while operating income will dip 8% to 115 billion yen ($752.7 million), primarily due to a revision in the results forecast of its media networks business in India.
“The operating environment [in India] is challenged primarily due to softness in the advertising market and a decrease in viewers of pay television,” Sony said. “However, under the new local management team that started in August, we are strengthening our operations and rebuilding our strategy to grow the business over the mid- to long-term, including by continuing to improve viewership through re-strengthening of our programming.”
Games segment grows strongly
Game and Network Services sales grew 12% year over year to 1.72 trillion yen ($11.26 billion) due to an increase in third-party software sales, despite a decrease in hardware sales. Operating profit for the segment jumped 184% to a record 138.8 billion yen ($908.6 million) for its second quarter, due to an increase in hardware, third-party software and network services profit.
Monthly active users across PlayStation platforms grew 8% to 116 million accounts, marking the eighth consecutive quarter of growth, while total play time grew 14% compared to last year and 11% since the beginning of fiscal year 2024. During the latest quarter, 3.8 million PlayStation 5 game consoles were sold globally, compared with 4.9 million units sold the same period a year ago.
Astro Bot has sold over 1.5 million copies in the nine weeks since its release on Sept. 6, with 37% of users who purchased the title not purchasing a title from Sony in the last two years. Sony also launched two live service games in 2024: “Helldivers 2,” which was a hit, and “Concord,” which was shut down.
Looking ahead, Sony increased its sales forecast for the segment by 4% to 4.49 trillion yen ($29.4 billion) and expects operating income for the segment to grow 11% to a record 355 billion yen ($2.32 billion). It expects sales and profits to decline in the second half of the year due to comparisons related to Marvel’s Spider-Man 2 and Helldivers 2.
Music catalogs drive streaming growth
Music sales grew 10% to 448.2 billion yen ($2.9 billion) and operating income increased 12% to 90.4 billion yen ($591.9 million), primarily due to an increase in live performance, merchandising and licensing revenues, as well as streaming revenue.
“We are expanding our business globally in markets where streaming is
growing quickly, such as emerging markets, including through digital music
distribution and artist services provided by The Orchard and AWAL,” the company said. “On the other hand, in countries and territories where streaming is more widespread, consumption of catalog music is increasing.”
Sony noted that the share of consumption for catalog music released over 18 months ago reached 73% in the recorded music market in the U.S. Additionally, the share of songs released over 10 years ago in the Spotify Global Top 200 grew from less than 5% in 2020 to over 20% through the end of July due to a demographic shift to more mature age groups, as well as more opportunities for younger listeners to consume older hit songs on social media.
“These music catalog assets serve as a stable earnings foundation for the long term not only from the consumption of streaming but also from use in media such as movies and advertisements,” the company added. “Additionally, by also acquiring name, image and likeness rights related to music artists for some catalogs, we are pursuing additional monetization opportunities such as merchandising and experiential live events that use these rights.”
The music segment’s full-year forecast remains unchanged from the previous forecast of 1.74 trillion yen ($11.39 billion) in sales and 330 billion yen ($2.16 billion) in operating income.
